Polygon Co-Founder Warns of Ethereum Division Over L2 Pressure

Sandeep Nailwal, co-founder of Polygon, has raised concerns about the potential for division within the Ethereum community due to increasing pressure on the Ethereum Foundation to limit layer-2 (L2) networks. During a recent episode of a blockchain-focused show, Nailwal warned that such actions could "break the entire social fabric" of the Ethereum ecosystem. He noted that this pressure and anti-L2 rhetoric have been particularly pronounced during the current market cycle, characterized by subdued price movements for Ether (ETH).

Nailwal emphasized the interconnected nature of Ethereum and its L2 networks, stating that the survival of Ethereum is crucial for the survival of L2 solutions. He cautioned that excessive pressure on developers for short-term price gains could lead to decisions that compromise the long-term health of the Ethereum network. Nailwal praised Vitalik Buterin, the co-founder of Ethereum, for his leadership in maintaining the cohesion of the Ethereum ecosystem. He described Buterin as the "DNA" of the network, attracting talented developers who build on top of Ethereum's base layer.

Nailwal also discussed the distinction between settlement layers and execution layers in blockchain networks. He identified Bitcoin and Ethereum as the primary settlement layers, with all other networks serving as execution layers. According to Nailwal, the future of blockchain technology will see an increase in applications with their own blockchains to avoid gas fees, ultimately posting final transactions to settlement layers like Ethereum. This interoperability will benefit Ethereum's base layer, promoting long-term growth and value accrual.

Critics of Ethereum's execution layers argue that these scaling networks are currently cannibalizing the base layer, leading to a significant drop in Ethereum L1 revenue. However, Nailwal countered this view by asserting that the differences between settlement and execution layers mean that no other crypto network poses a real threat to Ethereum, except for Bitcoin. He noted that Bitcoin could only become a threat if it adopted advanced scripting options to enable reliable smart contract functionality similar to Ethereum.

Nailwal's comments highlight the delicate balance within the Ethereum community between innovation and stability. As the ecosystem continues to evolve, the decisions made by the Ethereum Foundation and its developers will play a critical role in shaping the future of the network. The push to restrict L2 networks, if not managed carefully, could indeed fracture the social fabric of Ethereum, undermining its position as a leading smart contract platform.